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Tuesday - July 25, 2000
Study of Napster Contradicts
Industry Internet Beliefs
Users of networked music-sharing technologies, such as
Napster, are 45 percent more likely to have increased their
overall music purchasing than nonusers are, according to
a new study by Jupiter Communications, Inc, the worldwide
authority on Internet commerce. Record companies must refocus
their strategy from litigation to adoption, and incorporate
networked music sharing into their distribution channels.
"Because Napster users
are music enthusiasts, it's logical to believe that they
are more likely to purchase now, and increase their music
spending in the future," explained Aram Sinnreich,
an analyst with Jupiter. "But when we conducted our
consumer survey, controlled for key music purchasing factors-such
as existing spending level, age, income, gender, and online
tenure-we still found that Napster usage is one of the
strongest determinants of increased music buying."
Since the launch of sites and
software such as Napster and Gnutella, record labels and
intellectual property owners have demonized networked music
sharing, even as it has gained enormous traction among
consumers. However, these players have yet to capitalize
on the upside of such sharing technology.
"An inherent flaw in the
Recording Industry Association of America (RIAA) argument
against Napster is that the association's supporting research
shows a decline in record sales in college areas, with
high Napster usage," said Sinnreich. "However,
the RIAA did not clarify that the most attrition took place
before Napster's launch, and the analysis did not account
for channel shift to online transactions that would have
occurred independent of Napster's existence."
Internet music distribution
provides a direct marketing and distribution conduit to
individual music fans, and offers businesses the ability
to learn about consumers' tastes and habits through its
back channel; networked music sharing delivers on this
promise better than any other online music application
to date. According to Jupiter's research, if the music
industry were to let players like Napster stand, it would
drive incremental sales. But, if the industry partnered
with networked music-sharing technology companies, the
benefit would be exponentially greater.
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